Bikul Has Just Started a Great Job and Plans to Buy

question 66

Multiple Choice

Bikul has just started a great job and plans to buy a fancy car worth $100,000.Bikul is risk-averse in money matters,but he likes to drive fast,so the probability that he wrecks the car (a total loss of $100,000) is 0.10.The probability that he has no accidents is 0.90.If an insurance company offers Bikul a fair insurance policy,the premium will be:

• A)$10,000.
• B)$90,000.
• C)$80,000.
• D)It is impossible to calculate a premium unless we know Bikul's utility function.

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Definitions:

MEO

Medium Earth Orbit, referring to satellites that orbit the earth at altitudes between Low Earth Orbit (LEO) and Geostationary Orbit (GEO), commonly used for navigation and communication.

Low-Power Transmitters

Electronic devices designed to broadcast signals over a short distance with limited power output, often used in personal or localized broadcasting scenarios.

GEO

Stands for Geostationary Earth Orbit, a type of orbit 35,786 kilometers above the Earth's equator and following the direction of the Earth's rotation.

LEO

Low Earth Orbit, a region of space around the Earth at altitudes between 160 to 2,000 kilometers, often used for satellites that require close communication with Earth.